Within the last 12 months, Bitcoin has been searched most by residents of Nigeria, South Africa, and Ghana. Nigeria leads them with an insane 100 in search interest via Google Trends. Compare this to the US which has a mere 18 in search interest. Because of rampant corruption and the weak national currencies it brings with it, Bitcoin and cryptocurrencies have become a source of refuge for many Africans, and Nigeria is leading the charge.
As a result of this popularity, on September 15th, 2020, Nigeria's SEC issued regulatory guidelines for crypto assets. The guideline states that all crypto assets are securities, though it is doubtful their citizens feel the same. They also stated they would treat "non-fiat virtual currency as commodities if traded on an approved exchange. Since Bitcoin is faster to move, globally validated, and becoming more valuable due to its scarcity, this is a positive step for Nigerians, and Africans en masse.
According to Nairametrics, Nigeria has weekly peer to peer volumes of over $8 million a week. Kenya and South Africa follow them with $2 million worth in transactions. Translate this into a yearly outlook, and these three African nations are creating over $600 million in p2p transactions a year! Following in their footsteps is Ghana and Tanzania.
In the week of August 10th, Nigeria topped the list of Bitcoin.com wallets downloaded over the USA. Of the 18,613 wallets downloaded then, 3,473 were from Nigeria.
According to Statista, of the 4,000 Nigerians surveyed, 35% of them had an interaction with Bitcoin, compared to 7% of US citizens.
As previously mentioned, Bitcoin is finite and designed to increase in value over time.
As more Nigerians learn and trade in Bitcoin, this will only lead to a mass influx of wealth within the country as the price of BTC fluctuates upwards.
According to Yele Badamosi, CEO of Bundle, a mobile app that allows Nigerians to send and receive Naira and Bitcoin, "Speculation will probably be the biggest and one of the primary use-cases. We then have remittances and a medium of exchange between other currencies [as use cases]."
Many Nigerians are actually using their Bitcoin to purchase goods from China as well. According to Rume Ophi of Vorem Nigeria, citizens are using Bitcoin "especially in China because it is lucrative there even though the Chinese government is clamping down on transactions. The number of people spending Bitcoin now in Nigeria is increasing like wildfire."
Since Bitcoin and other cryptocurrencies have become accepted forms of payment for Chinese wholesalers, Nigerians have begun using Bitcoin as a method of bypassing any trade obstacles that may be arise. An example of this would be with Chukwuemeka [choo-kwoo-ay-mee-ka] Ezike [ay-zee-kay], community manager at popular crypto exchange Huobi.
In an interview with Coindesk, Ezike explained how he uses Bitcoin to receive auto parts, and construction equipment for his father's business. Ezike is able to bypass the banking limits of $10,000 to make larger orders, faster.
This also makes sense since Nigeria is a very import-heavy nation, with many of its needed goods coming from China. Combine this with the stress associated with banking limits, fees, and an overall difficulty to exchange foreign currencies, and it begins to be a no brainer as to why Nigerians are adopting Bitcoin at such a rapid pace.
The Nigerian naira has a 12% inflation rate, meaning every year the currency's value is sharply decreasing every year, disheartening and discouraging majority of Nigerian citizens from wanting to trade in their local currency.
This is a recurring theme for too many African nations, where local currencies are hyperinflated, and many people are unbanked. Around 17% of sub-Saharan Africans are unbanked, meaning they have no bank accounts. Furthermore, many Africans work as migrants in more developed countries, and send money back to their family. This is another scenario where Bitcoin comes in.
Africans have already been moving money digitally at an increasing pace, while remaining largely unbanked. M-Pesa is a mobile remittance service which is the most popular in the continent, so the increasing African adoption of Bitcoin is no surprise to industry insiders.
Because of the lack of jobs and an abundance of young people, there's also the potential of a new generation of people working around cryptocurrencies. Because of currency disparities, this signals the potential of Africans entering the outsourcing industry in full force.
We're also seeing Bitcoin being used to circumvent banks in Nigeria as the Feminist Coalition asked supporters to donate BTC to them because their bank account was allegedly blocked by local authorities. They later received over $1 million in donations.
All of this is due to the recent protests related to Nigeria's Special Anti-Robbery Squad allegedly committing police brutality. Even Jack Dorsey tweeted support of the Feminist Coalition, adding a link that is now not working.
Ghanain crypto marketer Elisha Akyaw explained, " With the cryptocurrency system, people are able to start their own business, people are able to work for big brands outside their own country through cryptocurrency and make a living for themselves."
Not all countries in Africa are supportive of Bitcoin with some countries like Zimbabwe having gone as far as banning Bitcoin. Currently it is prohibited in 6 other African countries (Namibia, Morocco, Algeria, Zambia, Swaziland, and Libya). Now they are warming up to methods to effectively regulate cryptocurrencies and prevent mass capital flight.
It is completely understandable for nations to be wary of cryptocurrencies in terms of the protection of local wealth, but should the rampant corruption continue, people will buy cryptocurrencies regardless of legal status. This is true for all nations, another example of the financial revolution that Bitcoin has started.
The Government of Kenya set up a task force to look into the use of digital currencies and artificial intelligence, and blockchain is slowly becoming part of the countries' infrastructure. One area in which blockchain is being applied is with real estate, authenticating records to prevent fraud and confusion related to land ownership.
TMT Enterprises for instance, is a logistics company that utilizes blockchain technology through smart contracts to establish authenticity and better transparency surrounding the records of imports and exports.
South Africa is yet to establish any regulation related to Bitcoin and other cryptos, but they are actually more open minded and inquisitive of this new technology, as regulators have begun researching how they can effectively regulate it and streamline the
In January 2019, the South African Reserve Bank, South African Revenue Service, National Treasury, Financial Intelligence Center, and Financial Sector Conduct Authority released a consultation paper with proposals on policies related to cryptocurrencies.
Their goal is to provide a platform for regulators to work with local industries towards mutually beneficial regulation, the first of its kind.
Of course nothing is without its risks, and there are crypto scams and ponzi schemes that put citizens at risk. This is where regulations would come in. As Nigeria, South Africa, and Kenya officiate cryptocurrency regulations, this will set off a chain of events where other African countries will follow suit, even the potential for a unified African cryptocurrency to stave off hyperinflation and make for seamless intercontinental trade.
Ultimately, Nigerian citizens are positioning themselves for future prosperity with their early Bitcoin adoption, setting the precedent for their neighbors to follow suit. With the price of a single Bitcoin poised to climb even greater than its current $10k threshold, Nigerian wealth will only increase.
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